Examining Strategic Motives of National Brand Manufacturers towards Producing Retailers’ Private Labels: An Empirical Study in Taiwan
Shih-Tung Shu
Associate Professor, Department of Marketing Management,
National Kaohsiung First University of Science and Technology
Abstract
With the emergence of more private brands launched by chain stores, Taiwanese national brand manufacturers face a strategic dilemma of whether they should produce competing private brands. Past research offers tactics of how national brands compete with private brands, but there is little investigation into why they manufacture the products for retailers. This study examines the manufacturers’ strategic motives that lead to their contract manufacturing for private labels.
Twenty-five expert samples were selected from Taiwan food companies which have been involved in contract manufacturing for private labels. The results of the Analytic Hierarchy Process (AHP) show that Taiwanese national brand manufacturers primarily harboureconomics motives most for the apportionment of production cost and profit increase. Among relationship motives, expansion of display space is considered to be the most decisive. For competitive motives, manufacturers intend to nurture value private labels to attack other national brands for total market share increase. The empirical evidence here offers brand practitoiners useful implications for adopting a private label production strategy.
Keyword：Private labels, national brand manufacturer, AHP
